37% Increase in Water, Sewer Rates Proposed : Upgrading: Proposal by city manager would increase rates to pay for a $2.8-billion sewage treatment plant. Developers also face sharp increases in hookup fees.

San Diegans’ water and sewer rates would rise 37% over the next five years to pay part of the cost of the city’s proposed $2.8-billion sewage treatment system and improve water quality under a plan released by City Manager John Lockwood Monday.

Developers--and, eventually, new home buyers--would absorb a far larger increase of 123% in the fees they pay to hook up a home to the city’s water and sewer systems over the same period, according to the proposal, which would take effect July 1 if approved by the City Council.

The new rate schedule would, for the first time, provide single-family homeowners with incentives to conserve water by replacing the existing flat-rate system of sewer fees with rates based on actual water use. In addition, the existing two-tiered water pricing structure would be expanded to three tiers in order to penalize major water users with higher prices.

“If you contribute less water to the sewer system, you will pay less for sewage,” said Milon Mills, assistant water utilities director.

Lockwood also is proposing discount water and sewer rates for poor and fixed-income, single-family homeowners.

On average, however, monthly sewer bills for single family homeowners would rise from $17.12 today to $24.41 on July 1, 1995, and water bills would increase from the current $16.80 to $22.07 a little more than five years from now. The total monthly charge would jump from $33.92 to $46.48 monthly, an increase of 37%.

The first of a series of annual 6% increases in the sewer rates would take effect July 1, if the council approves Lockwood’s recommendations. Water rates for the average user would decline slightly before rising at a 6% annual rate.

Last June, the council raised monthly sewer fees from $13.52 to the current $17.12. A year before that, the council increased sewer fees by $3.12, up from $10.40 monthly.

Owners of multifamily units will be hit with a one-time sewage rate increase that could be as much as 35.5% July 1, to bring the city’s rate structure in compliance with State Water Resources Control Board rate-setting guidelines. For the same reason, some owners of commercial and industrial buildings may see their rates slashed as much as 19.9%.

The increases over the next five years are smaller than expected because the city’s Water Utilities Department also is asking for authority to borrow money to build the sewage and water treatment systems. To date, the department has financed construction by collecting large amounts of cash before construction, resulting in sharper yearly increases, said Deputy City Manager Roger Frauenfelder.

The so-called “debt financing” requested by the department would spread out increases over a longer time. Frauenfelder said the city’s 1.1 million water and sewer users can expect 6% annual rate increases, at least through 2000.

But Councilman Bruce Henderson, chief council critic of the $2.8-billion sewage treatment project, said sewer rates are already too high for many people and worried that rates will jump after 1995.

“My concern is that there is a big hit after ’95 because I haven’t seen the numbers,” Henderson said.

The sewer fee increases will be spent on the $2.8-billion upgrading of the city’s sewage treatment system to the standard required by the federal Clean Water Act, a mammoth public works project that will cost about $6 billion when financing costs are factored in. The U.S. Environmental Protection Agency sued the city in 1988 to force compliance with the law, settling out of court with the city in January.

The increases in the water bill will pay for upgraded water treatment required by the federal Safe Drinking Water Act and some expansion of the city’s water pipeline system.

Meanwhile, developers, who last year saw the council raise water hookup fees 160% and sewer connection charges 95%, effective immediately, will bear an additional 150% increase in the water fee and a 120% price rise in the sewer charge over the next five years.

The water hookup fee, now at $1,701 per home, would rise to $4,252 by July 1, 1995. The sewer connection charge, now $3,332, would jump to $7,348.

The proposal comes during what could prove to be a black week in the history of the city’s development industry: on Thursday, the council is scheduled to debate the imposition of huge fees on new development that could generate $1 billion over the next 20 years.

Julie Dillon, president of the Building Industry Assn., said the impact fees scheduled for debate Thursday, and others being considered by the San Diego Assn. of Governments will push the total fees assessed on many new single-family homes over $20,000 each. Those, and the water and sewer hookup fees recommended Monday, will be passed on to buyers, making housing even less affordable than it is today, she said.

“This is just simply going to prevent people from being able to buy houses, even in in-fill areas,” Dillon said. “We all know you can’t build a house with a fee of $16,000 on it and still sell it in a price range that people can afford.”

But Frauenfelder responded that the fees represent developers’ “fair share” of growth costs as calculated by the Water Utilities Department.

“That’s been the problem with the system,” said Mayor Maureen O’Connor. “The developers haven’t been paying their fair share.”